Book chapter

English

15 years experience and the future of privatisation

The idea of concluding privatisation in Hungary first arose in 1997. Since then, two governments have considered the proposals and turned them down. In our estimation, the postponement occurred for short-term political-power reasons rather than for well-grounded economic considerations. Even in this case, however, economic rationality remained undamaged, as a fair number of companies could be still sold during recent years, though at varying rates. At the end of 2004 it did not appear impossible that with a few exceptions the state assets in the competitive sector would soon be acquired by new owners. The principle can thus be confirmed that privatisation is worth declaring completed if it has really been concluded, i.e. when the assets to be sold and able to be sold have been acquired by private companies.

In: Állami vagyon ? privatizáció ?gazdasági rendszerváltozás, ÁPV Rt. (State Assets ? privatisation ? economic transition, State Privatisation and State Holding Company) 2005, Számadás a talentumról sorozat ("Giving account of the talent" series) pp. 16-43

Budapest Transport Company: from a large socialist enterprise to a market oriented company

(Experiments, results and drawbacks)

Public transport in large cities is a problem all over the world, for passengers, politicians running the city, and experts organising the network. What kind of structural features cause these difficulties? Where did the service provider and the company owner seek a way out? What results have there these steps achieved and what drawbacks have they faced? As well as information available to the public, the answers are based on an analysis of company documents and the experience gained as a participating observer or in some cases as a participant in decision making. Having analysed the attempts at transformation, the stabilisation and reorganisation schemes over the last ten years, the study has drawn the conclusion that the attempts have not resulted in long-term solutions. The most important result is that the attempt itself was made, partly because various representatives of the owner and the company management have thoroughly considered the reasons for the difficulties and their direct and long-term consequences. On the other hand, even the restricted result of the attempts is a result. It has become clear that no breakthrough can be expected from the changes implemented so far. If the owner and the company wish to provide a permanent, long-term solution to the now chronic problems, they must take more decisive action than they have so far.

In: A Budapest-modell, Egy liberális várospolitikai kísérlet, Szerk. Pallai Katalin, Nyílt Társadalom Intézet Alapítvány (The Budapest model. A liberal urban policy experiment. Ed. Katalin Pallai, Foundation of Open Society Institute) 2003, pp. 257-282

Management of residual stat property: Implications for Corporate Governance of privatized companies the case of Hungary.

Privatisation is coming to the end in Hungary. By spring 1998 the bulk of state owned property was in private hands. According to official statistics, private enterprises account for nearly eighty per cent of GDP and almost three quarters of the capital is privately owned. More than one thousand firms were fully privatised during the period 1990-1997.
Considering the recent ownership structure of the Hungarian economy, already fairly similar to that of several West European countries, government can declare at any time the end of privatisation process. Debates on legal and institutional frameworks of controlling the residual state property have started in 1997. Despite of detailed proposals of several governmental apparatuses and consulting firms, no final decision was made before the parliamentary elections in May 1998. The future of state residual property is yet to be seen.
This analysis summarises first the main characteristics and results of Hungarian privatisation process as the precondition of managing the residual state property. The second section gives the inventory of the different controlling institutions and describes the positive and negative features of their activities. The last section presents the alternatives of state asset management considered in Hungary for the post-privatisation period, including the possibilities of further privatisation transactions.

Country paper for C.E.E.P.N. research project on management of residual state property, June 1998

Dinosaurs don?t want to die

Restructuring and Privatization of Big Enterprises in Hungary

?Dinosaurs were huge animals?, a chief executive explained me in the early 80s before our extensive knowledge of paleontology was developed from the books of our children. ?If a rat started to chew their tail it took several years for the information to reach the dinosaurs? brain. Our big enterprises are just like dinosaurs? - he stated with self irony. Have these primordial creatures died out of the Hungarian economy? The crucial question of our research was how the political and economic turnover affected the Hungarian large scale industry. How has the organizational and ownership structure of the socialist big enterprises changed? How have their production structures, patterns of behavior and orientations changed? What enterprise strategies have proven to be successful? What has the role of the government been like in connection with big firms? In order to answer these questions we used a combination of economic and sociological methods, based on case studies and the processing the balance sheet data of 49 enterprises, which were considered as privileged, strategic firms under Socialism. First we will outline the main characteristics of the big enterprise group concerned, than have a look at the method and degree of organizational and ownership changes. In the last section the basic lines of disintegration, the elements and the constraints of disintegration will be presented.

Published by Perfekt-Pénzügykutató Rt. 1997 (in Hungarian)

Privatization in Central East Europe: can it be designed?

According to general understanding, privatization in Central East Europe does not simply mean the transfer of individual firms from state hands to other proprietors, but it is the precondition and the main instrument of rebuilding the whole economic system. Thus, the task is not to fit in state owned enterprises into a functioning market but to create this new integration mechanism parallel with and by the mean of a wide-ranging change of ownership structure. One of the basic dilemmas of the transformation is, whether it is possible to build up the frameworks of a decentralized market mechanism applying a comprehensive, homogeneous privatization strategy, carried out by centralized governmental institutions. In other words: can privatization be designed?
Based on the Hungarian experience, in comparison with Czech-Slovakia and Poland, this paper will argue that all governments have tried to do so. Nevertheless, their attempts to design ownership changes have been successful at a different degree - not (only) in terms of privatized assets or enterprises but in terms of the impact of programs, guidelines and centralized decision making on the transformation of the proprietary structure. The degree of "design" will be characterized by the stability versus shifts of governmental privatization policies and the relationship between the programs declared and the empirical changes.

In: Institutional Design in New Democracies, A. Lijphart, C.H. Waisman eds., Westview Press, Boulder, Colorado, 1996. 177-194.

Pages

Subscribe to RSS - Book chapter